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Winter Committee Meeting Update.

On January 30-31, the GFOA's annual Winter Meeting for the Standing Committees was held in Washington, D.C. With more than 175 members in attendance, the event was a great success. Many issues were addressed throughout the two-day event during individual committee meetings, the Women's Network, the Black Caucus, the Technology Resource Group's meetings, and the general sessions. The New Member Luncheon brought together more than 20 new committee members, representatives from the GFOA Executive Board, and committee chairpersons and vice-chairpersons. The GFOA evening reception had approximately 100 guests from the Washington, D.C., public finance community in attendance, alongside GFOA standing committee members.

Speakers from the Internal Revenue Service, the Securities and Exchange Commission, the Municipal Securities Rulemaking Board, and the National Federation of Municipal Analysts visited the committees and discussed issues of importance to GFOA and its members. Additionally, the Women's Network and Black Caucus held meetings to discuss their efforts to increase membership, gain a more significant presence within GFOA--especially via the GFOA Web site--and outlined plans for their June meetings at the annual conference.

GFOA's President, Anne Kinney, released the results of the Technology Resource Group's Technology Survey at the general session breakfast. Following her remarks, the event's keynote speaker, Dr. Rudolph Penner, Senior Fellow and Arjay and Frances Miller Chair in Public Policy at the Urban Institute and former director of the Congressional Budget Office, delivered his remarks regarding the state of the economy.

Dr. Penner began his remarks about the status of the economy, which he views as superb, despite the fact that the surplus projections are incredibly uncertain and Congress will use up a significant portion of the surplus over the next few years. State and local governments still will benefit from the nation's robust fiscal health. Dr. Penner suggested that recent public opinion polls have shifted and that people prefer a tax cut instead of paying off the debt. Chairman Greenspan added fuel to the fire by commenting that he too favors tax cuts, and even the Democrats are now commenting that they wish to adopt some type of tax cut, although not as large as the one being proposed by the Bush administration. Dr. Penner cautioned the audience to be aware that the budget forecasts are subjective. Figuring out a cumulative surplus over the next 10 years is difficult when giving equal weight to both the years 2001 and 2011. However, despite the uncertainty that the surplus could be zero or $12 trillion over the next 10 years, Dr. Penner remains optimistic about the economy and believes Congress will increase appropriations for grants to states and localities. On the subject of Internet sales taxation, Dr. Penner stated that he believes a far more serious problem for the sales tax is the failure in many states to tax large portions of services, the fastest growing component of the economy.

Committee Meeting Summaries

Committee on Accounting, Auditing, and Financial Reporting (CAAFR). The Committee on Accounting, Auditing, and Financial Reporting (CAAFR) began preliminary discussions of topics included in its strategic plan for the development of recommended practices. These topics included accumulating the information needed for infrastructure reporting and preparing an effective accounting policies and procedures manual. CAAFR considered other topics for potential recommended practices that will require joint development with other standing committees. They plan to work with the Committee on Governmental Budgeting and Management on the topics of recommended level of fund balance and the appropriate use of cost data and to work with the Committee on Governmental Debt and Fiscal Policy on the subject of ratio analysis.

CAAFR also considered its formal response to the Governmental Accounting Standards Board (GASB) recent exposure draft on the governmental financial reporting model entitled, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments: Omnibus, an amendment of GASB Statements No 21 and No. 34. The purpose of the proposed omnibus pronouncement is to clarify certain provisions of GASB Statement No. 34, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments, to ensure consistent implementation among governments. Also, the ED proposes to amend other provisions of that Statement to ensure that their implementation produces results that are consistent with the GASB's intentions.

Committee on Cash Management. The Cash Management Committee wrapped up a productive two days of meetings in Washington D.C., capped by the formation of two recommended practices. These were approved by the Executive Board in March.

The first recommended practice takes on the issue of proper procedures when investing in commercial paper. Commercial paper is a common investment allowed in 30 states, according to a November 2000 survey of 50 states published in Public Investor. The question of prudent procedures has taken on some urgency in recent weeks, due to the default on commercial paper by utilities in California. It should be noted that some governments which invested in this commercial paper already had procedural safeguards in place (such as diversification procedures) which have limited their portfolio's exposure to loss.

The second recommended practice aims to protect governments against check fraud. Because of increasingly sophisticated forms of check fraud, the Cash Management Committee recommends that governments consider adopting "positive pay" or reverse positive pay, which actually allows governments to electronically intercept bad checks before they are cashed. It is considered the leading form of check fraud prevention today.

Committee on Governmental Budgeting and Management. The GFOA Committee on Governmental Budgeting and Management opened its meeting under the leadership of a new chair--Ernie Anderson, the General Service Director of the City of San Diego. The committee had many major accomplishments, including a new GFOA recommended practice on the adoption of financial policies. The recommended practice proposes that, at a minimum, jurisdictions should formally adopt financial policies in the areas of financial planning, revenues, and expenditures. The financial policies adopted should be used to frame major policy initiatives and be summarized in the budget document. The committee also has drafted a proposal to the Executive Board outlining strategies for launching a new multi-year GFOA Performance Measurement Initiative. The proposal is designed to provide a roadmap for GFOA to promote effective performance measurement and benchmarking that links to the budget process.

Future endeavors for the committee include beginning to discuss the contours of a recommended practice on costing government services. The committee agreed to set up a joint task force with the CAAFR Committee to produce a recommended practice by June. Also, the committee will be discussing ways to promote dissemination of information about innovations and best practices in government through publications, the Web site, and training seminars.

Committee on Governmental Debt and Fiscal Policy. The Committee on Governmental Debt and Fiscal Policy did not adopt any recommended practices at its winter meeting but did unanimously support two resolutions relating to arbitrage. The first resolution supports the American Bar Association's proposal on intermediate sanctions for arbitrage violations. The second supports the Council on Infrastructure Financing Authorities' legislative initiative to exempt state revolving funds' (SRFs) reserve fund earnings from arbitrage rebate requirements.

In other business, the Disclosure subcommittee decided not to revise GFOA's 1991 Disclosure Guidelines for State and Local Government Securities. Instead, the committee will be issuing a series of recommended practices on specific disclosure topics. The committee also will be working closely with the National Federation of Municipal Analysts on disclosure guidelines for general obligation bonds and other sectors.

The Subcommittee on Recommended Practices began drafting a Recommended Practice on Record Retention for Arbitrage Rebate Compliance and plans to present the practice to the full committee for consideration in June after meeting with IRS officials.

The committee also will be distributing guidance to members on how to respond to a notice of audit from the IRS and what new information to disclose under GASB Statement No. 34. The committee also will urge issuers to include cover sheets with their secondary market disclosures that contain nine-digit CUSIP numbers and other information so that the repositories (NRMSIRs) can tie the disclosures to specific bond issues.

In final business, the committee also agreed to develop new working groups on continuing education for debt professionals, fiscal policy issues, and electronic and selective disclosure.

Committee on Retirement and Benefits Administration (CORBA). The Committee on Retirement and Benefits Administration (CORBA) discussed at length the Social Security Government Pension Offset as it relates to GFOA's policy on mandatory coverage for state and local government employees. The committee also reviewed legislation restricting governments' display and use of Social Security numbers for identification purposes and discussed the potential impact on GFOA membership. A task force was appointed to collect illustrative data on this issue, in order that GFOA's concerns can be communicated to Congress. CORBA also formed a task force to draft a new recommended practice on brokerage accounts in a defined contribution/deferred compensation plan and continued work on the development of a policy statement on prescription drug coverage for retirees.

Committee on Canadian Issues (CCI). The Committee on Canadian Issues (CCI) held its third annual winter meeting in Vancouver, British Columbia, on January 6th. At that meeting, the committee continued its detailed review of GFOA's Recommended Practices to determine their specific applicability to Canadian governments. The CCI also examined the GFOA's Code of Professional Ethics. The committee is in the process of producing a Canadian members' Handbook which will include Recommended Practices relevant to Canadian governments, the Code of Professional Ethics, and an Applicant's Guide for the Canadian Award for Financial Reporting Program.

The committee reviewed a wide range of issues. The CCI examined professional development efforts for GFOA's Canadian members. Topics such as recruiting Canadian authors for the Government Finance Review and recruiting additional Canadian speakers for the GFOA Annual Conference were discussed in detail. Also, the committee examined its efforts to increase the links with other organizations in Canada (e.g., the Federation of Canadian Municipalities) to better achieve common goals. Canadian Finance Matters, GFOA's newsletter distributed to Canadian members, also was discussed by the committee members. The CCI has decided to include an additional section within the newsletter to discuss financial issues encountered by various governments throughout Canada.

Technology Resource Group (TRG). Having just completed the TRG Technology Survey, the TRG is looking forward to maintaining its workplan in 2001. On the horizon is a survey on "Internet Use in the Workplace." TRG plans to use the results to develop a model Internet policy. The TRG is expected to distribute the survey within the next two months and summarize the results by the annual conference. In addition to the Internet use study, the TRG continues to make contributions and ideas for the GFOA Web site, and it will assist the newly hired GFOA Webmaster with renovating the site. More interactive items are now featured, including annual conference hotel registration, and more items such as this are expected in the months ahead. The TRG also will be looking to add additional external links to the Web site and create targeted e-mail distribution lists. Finally, the TRG will spend a good amount of effort on recruiting members from each GFOA committee to ensure that each committee's technology needs are being add ressed.

The next committee meeting will be in June in conjunction with GFOA's annual conference in Philadelphia.

SUSAN GAFFNEY-CAMPANELLA is Director of GFOA's Federal Liaison Center in Washington, D.C.
COPYRIGHT 2001 Government Finance Officers Association
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Title Annotation:table
Author:GAFFNEY-CAMPANELLA, SUSAN
Publication:Government Finance Review
Article Type:Brief Article
Geographic Code:1USA
Date:Apr 1, 2001
Words:1883
Previous Article:Proposed Technical Amendments to GASB Statement No. 34.
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